Belt & Road: commercial banks need financing flexibility

Author: Karry Lai | Published: 26 Oct 2018

Infrastructure financing can offer immense opportunities for
commercial banks to participate in Belt and Road Initiative
(BRI) projects but challenges remain, according to panellists
at the Belt and Road Initiative: Infrastructure Financing forum
on October 15 in Hong Kong.

Infrastructure loans pose a number of challenges to
commercial banks and many are reluctant to lend. However,
infrastructure loan-backed securities, if properly organised,
can be a win-win for the capital markets, intermediaries and
project owners.

"In addition to the large loan size, infrastructure loans
tend to be less homogeneous and each can have their own risks
which means a different corresponding structure is needed for
each project," explained Norman Chan, chief executive of the
Hong Kong Monetary Authority. Managing a BRI infrastructure
loan portfolio requires a manager to have the relevant
experience and track record. Additionally, the risk appetite of
long-term investors needs to be adjusted over time. Chan said
that...